Whether or not you include your shipping expenses in the price of the item or within your shipping charges, you still have to charge for it if you're trying to run a business and keep it afloat.
dmh is right -- any mail order company has to cover their shipping expenses.
It's very easy to look around on eBay and see who the perpetrators of fee avoidance are. And if they can argue that they can break down their shipping charge into actual expenses, then that's probably still reason enough to avoid them because they clearly need a new business plan.
For instance, I sell comic books. I notice other eBay sellers who charge Priority Mail rates (or Priority Mail prices for Media Mail) for one comic book and that seems excessive to me, but only that. However, if they listed a single comic for 0.01 and charged $10.00 that would clearly be fee avoidance (whether that was their intention or not).
Direct2U, I actually think your description info in the second post sounds pretty good but there's still that possibility of it causing you trouble. It may make you a target for those who know you're talking about them. Keep in mind that eBay seems to make a lot of blind decisions based on the reports of members.